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Here's Apple's Biggest Concern (Update 2)

"From the carrier's perspective, I think it's also important to remember that the total subsidy that they pay is fairly small relative to the monthly payments they collect over a 24-month contract period," Cook said on a July 2012 earnings call. "And I think many would tell you, they certainly told to me, that iPhone has several advantages for them over other smartphones, the churn rates are much less, you see carriers now focusing on shared data plans and I think an iPhone customer is likely more - is more likely to have a Tablet or an iPad. And so I think they really value these customers quite a bit."

While Um downgraded shares, he did note several highlights for 2014. Those highlights include the next iPhone, currently dubbed the iPhone 6, which many believe will have a 4.5 inch or 5-inch screen. Um also mentioned iBeacon, an indoor position system, used to notify iOS users of nearby deals. Apple describes it as "a new class of low-powered, low-cost transmitters that can notify nearby iOS 7 devices of their presence."

The last catalysts Um mentioned were the potential for an increased dividend/buyback, and the oft-rumored iWatch.

Um also mentioned the long-anticipated but never seen Apple TV. "While we expect Apple to enter the TV market eventually, we do not expect a product in 2014," the analyst mentioned in his note.

He also expects Apple to report strong results this holiday season, driven by the iPad mini, iPad Air and new iPhones announced in recent months. He's expecting Apple to have sold 54.8 million iPhones and 24 million iPads this holiday season.

AAPL ChartAAPL data by YCharts

--Written by Chris Ciaccia in New York

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